“These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now.”
“We have heard that the intended target for this is global corporations, but make no mistake that the real impact will be on Marylanders who use advertising services within a digital interface."
“It Is Mind Boggling That Policymakers Would Enact A Digital Advertising Tax That Will Hurt Small Businesses.”
“The bill is attempting to snipe global media behemoths for quick cash. Instead, it waves a bazooka in their general direction, leaving room for severe collateral damage to our business throughout the region.”
“There’s been a lot of discussion here that this tax is going to fall on these big Silicon Valley, these big tech companies, that we’re going to be reaching into Jeff Bezos’ wallet or Mark Zuckerberg’s wallet and using that money to fund our public education needs here in Maryland. I think that’s completely erroneous. They’re not going to be borne solely by these large tech companies, they’re going to be passed down to businesses and ultimately down to Maryland consumers.”
“Taxing advertising and advertising services will choke economic growth... This is the antithesis of being ‘Open for Business.’ Taxing advertising and advertising services doesn’t make good business or economic sense. It will hurt consumers and businesses and slow Maryland’s economic growth.”
“An ad tax could ultimately lead to less local news, traffic, weather and sports. Many websites are free and advertising-supported. An ad tax will lead to less content and/or more paywalls, making them inaccessible to many lower-income Marylanders.”
“I think businesses throughout history have demonstrated an adeptness to passing through taxes. That is a reality of the system.”
“Although the bill ostensibly targets large technology companies and advertising platforms, much of the burden would fall on Maryland businesses and consumers, and the timing couldn’t be worse.”
“At a time when businesses are facing unprecedented challenges amid the COVID-19 pandemic, Governor Hogan’s decision will substantially help Maryland consumers and businesses.”
Governor Hogan Called The Digital Advertising Tax “Misguided,” Stated That It Would Be “Unconscionable” To Raise Taxes And Fees During A Time When So Many Marylanders Are Struggling Financially. “These misguided bills would raise taxes and fees on Marylanders at a time when many are already out of work and financially struggling. With our state in the midst of a global pandemic and economic crash, and just beginning on our road to recovery, it would be unconscionable to raise taxes and fees now. To do so would further add to the very heavy burden that our citizens are already facing. For all of these reasons, I am vetoing Senate Bill 669, House Bill 1095, House Bill 732, and House Bill 932.” (Letter, Re: 2020 Vetoes, ( Maryland General Assembly), 5/7/20)
The Tax Foundation: The Digital Advertising Tax Would Hurt Many “Small Businesses Imperiled By The COVID-19 Pandemic.” “This afternoon, Gov. Larry Hogan ® vetoed a proposed first-in-the-nation digital advertising tax that would have imposed rates of up to 10 percent on digital advertising served to Marylanders. Although the bill ostensibly targets large technology companies and advertising platforms, much of the burden would fall on Maryland businesses and consumers, and the timing couldn’t be worse…. It is pleasant for many to think that this tax will just be borne by profitable tech companies somewhere out west, but what might be pleasant suffers from the disadvantage of being untrue. The reality is that much of the burden will fall on Maryland businesses, many of them small businesses imperiled by the COVID-19 pandemic.” (Jared Walczak, “Gov. Hogan Vetoes Maryland Digital Advertising Tax Legislation,” Tax Foundation, 5/7/20)
Association Of National Advertisers: The Governor’s Veto Helps Protect Nearly 400,000 Maryland Jobs, By Not Inflicting A Major Burden On Businesses. “The Association of National Advertisers (ANA) commends Maryland Governor Larry Hogan’s decision today to veto HB 732, the first digital advertising tax measure ever passed by any U.S. state legislature. At a time when businesses are facing unprecedented challenges amid the COVID-19 pandemic, Governor Hogan’s decision will substantially help Maryland consumers and businesses. This tax now will not be passed on to consumers. The veto of this counterproductive proposal is an important victory for ANA and our members. It relieves small and large businesses of a major burden on their efforts to market their products and services, which in turn helps protect the almost 400,000 Marylanders whose jobs are supported by the sale of products and services generated by advertising – nearly 15 percent of the 2.6 million jobs in the state.” (Press Release, “Association Of National Advertisers Commends Maryland Governor Larry Hogan’s Veto Of The Maryland Digital Ad Tax Bill,” Association Of National Advertisers, 5/7/20)
Paul Blair, Director Of Strategic Initiatives, Americans For Tax Reform: “Great news out of Maryland where Governor Larry Hogan has vetoed new digital advertising and huge vaping taxes, among others. Hogan says in his veto that in the midst of a global pandemic ‘It would be unconscionable to raise taxes and fees now.’ He’s right!” (Paul Blair, Twitter, 5/7/20)
Digital Advertising Tax Is A “Speech Tax,” Destroys Economy And Small Businesses, Hurts In-State Consumers
Ashley Duckman, Vice President Government Affairs, Maryland Chamber Of Commerce: The Economic Burden Of The Digital Advertising Tax “Will Be Felt Most” By Maryland Businesses And Consumers. “Beyond the enumerable legal and policy concerns presented by the bill laid out in front of you today, the Chamber is very concerned about something you’ve already heard and that is the prospect that the ultimate economic burden of SB 2 will be felt most and ultimately be borne by Maryland businesses and consumers. We have heard that the intended target for this is global corporations, but make no mistake that the real impact will be on Marylanders who use advertising services within a digital interface. We know that advertising service providers will pass on those costs to customers and that will include my small business members that utilize online platforms to promote their products, their services and they also use them to reach new customers.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
Jake Ward, President Connected Commerce Council: “It Is Mind Boggling That Policymakers Would Enact A Digital Advertising Tax That Will Hurt Small Businesses.” “In these trying times, it is mind boggling that policymakers would enact a digital advertising tax that will hurt small businesses when they need affordable marketing solutions the most… Our organization represents thousands of digitally empowered small businesses. Many are Main Street restaurants and retailers, but they also include manufacturers, event planners, and plumbers. These small businesses rely on affordable, efficient, data-driven online advertising, which they say outperforms Yellow Pages, billboards, and coupon mailers. Digital ads allow businesses to precisely select audiences by location, interests, and other factors that ensure return on investment.” (Jake Ward, “The Wrong Time For A Small Business Digital Tax,” Maryland Matters, 4/15/20)
The Interactive Advertising Bureau (IAB) Stated That The Proposal Would “Tax Businesses For Communicating With Their Customers” And “Punish Maryland’s Economy.” “Today, the Maryland General Assembly ignored the pleas of the Maryland business community by passing a tax on digital advertising. During this unprecedented time of uncertainty, when Maryland businesses of all sizes are already being forced to make hard decisions involving lay-offs and shedding essential operations, the Maryland Legislature has added insult to injury by taxing businesses for communicating with their customers. Counter to the misguided claims of the lawmakers that voted for this tax, this law will punish Maryland’s economy, decrease Maryland’s tax base, and directly affect every small business across the state.” (Press Release, “IAB Statement On Maryland Digital Advertising Tax,” Interactive Advertising Bureau, 3/19/20)
Alex Propes, Vice President, Public Policy, Interactive Advertising Bureau: A Digital Advertising Tax Will Cost Consumers “Thousands Of Dollars A Year” For Consumers, Less Access To Content. “Because of the importance of the digital advertising industry in Maryland we are concerned about the negative economic consequences of this law, which would hinder Maryland businesses from competing fairly with competitors in other states and would create new costs for Maryland citizens. That’s through increased subscription costs, and we have research that shows that can be thousands of dollars a year for the most common apps that consumers rely on. It would also mean less access to the content, including educational content, which is a huge percentage of the ad funded content online today.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
John Olsen, Director, State Government Affairs (Northeast Region), The Internet Association: If Fully Implemented, The Digital Advertising Tax Will Have A “Significant Impact On Small Businesses,” Costs Will Be “Passed Down To Maryland Residents.” “Our concern with this bill, if it were to survive court challenges, if it were to be implemented fully at some point. You’re going to see an increased cost for digital advertising in Maryland. And I think that has a significant impact on small businesses here in the state. I think you’re looking at, to your point, razor thin margins when it comes to budgeting will have to be significantly adjusted in order to get the same message out. And I think this has some significant impacts to local communities, the people who are in microbusinesses, people who really depend on this affordable option as opposed to traditional print advertising. I think that we have an incredible network of advertisers here in Maryland that are very nervous about the future, whether it’s in a few months, or in a few years, about the state of taxation in Maryland and the route that we would be taken. Just because the companies are being assessed are making millions to billions of dollars, does not mean that the cost would not increase for those who utilize these platforms. I think that’s an important point that needs to be noted. Ultimately this will be a cost that’s passed down to Maryland residents.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20)
The American Advertising Federation Of Baltimore Expressed Serious Concerns With The Digital Advertising Tax, In Addition To Constitutional Concerns, The Federation Expressed That The Tax Would Negatively Impact Brick And Mortar Businesses In Maryland Who Choose To Advertise Their Products And Services Online. “The economic burden of this broad new tax will fall on Maryland residents and Maryland businesses that are consumers of advertising services within a digital interface—including websites and applications. This is because advertising service providers may (and most likely would) pass the tax through to their customers (including local Maryland brick and mortar businesses seeking to reach new customers online), who will be forced to pay higher prices, receive lower revenues, or find cheaper alternatives. While on the surface the tax appears to fall only on large non- resident Internet advertising providers, this new tax initially will fall on Maryland advertisers through increased prices of up to 10% on Internet-based advertising. Eventually, the tax will fall on Maryland consumers who will suffer higher prices for goods and services they purchase from the companies advertising on the digital interface.” (Letter, American Advertising Federation Of Baltimore Re: Senate Bill 2,” American Advertising Federation Of Baltimore, 1/15/20)
Clark Rector, Executive Vice President, American Advertising Federation Stated That Job Loss, And The Instillation Of Paywalls On Websites, Which Would Hurt Lower Income Marylanders Most, Could Be A Result Of A Digital Advertising Tax. “The free flow of responsibly used data online is the economic engine that fuels the internet. Online advertising supports and subsidies content and services consumers expect and rely on including video, news, music, and so much more. Taxing digital advertising would reduce the amount of advertising that these websites have - they would either have to cutback on the content that they’re providing to consumers or some of them may put up a paywall, meaning you’ve got to pay to get to the content, and that is going to harm lower income Marylanders most of all.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20)
Pat Reynolds, Tax Counsel, Council On State Taxation: The Digital Advertising Tax Is A “Hidden Tax” On Maryland Businesses And Consumers. “If you look at the underlying tax policy principles which this bill would implicate, you have three major areas. One, being the issue that has been brought up several times in this hearing, including by Senator Edwards, where you have to ask yourself, who is going to bear the economic burden of this tax? Is it just the big businesses that you are taxing, or is it the folks that want to buy the services of that tax? And will the large businesses simply eat that tax or will they pass that on in the form of higher prices to the businesses in Maryland who want to use the services, and will those businesses in Maryland eat those increased costs or will they pass it on to the consumers of Maryland? And that’s a principle that we refer to as transparency, and this is in fact going to be a hidden tax that if you contrast that with a sales tax, a consumer goes and buys something at the store they can very clearly see what the tax rate is when they’re buying it. This couldn’t be more of a hidden tax.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
Matt McDermott, President American Advertising Federation Of Baltimore: “The bill is attempting to snipe global media behemoths for quick cash. Instead, it waves a bazooka in their general direction, leaving room for severe collateral damage to our business throughout the region.” (Matt McDermott, “Taxing Digital Ads To Finance Education Would Be A Serious Mistake,” The Baltimore Sun, 1/24/20)
Brandon Arnold, Vice President, National Taxpayers Union: It Is “Erroneous” To Think That This Tax Will Reach Into Jeff Bezos’ or Mark Zuckerberg’s Wallet; Taxes Will Be Passed Down To Maryland Businesses. “The second thing I want to point out here is a matter of tax incidence. There’s been a lot of discussion here that this tax is going to fall on these big Silicon Valley, these big tech companies, that we’re going to be reaching into Jeff Bezos’ wallet or Mark Zuckerberg’s wallet and using that money to fund our public education needs here in Maryland. I think that’s completely erroneous. Other people have said this already, but let me just reiterate the fact that these taxes will absolutely be passed down to Maryland businesses. They’re not going to be borne solely by these large tech companies, they’re going to be passed down to businesses and ultimately down to Maryland consumers.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20)
Vans Stevenson, Senior Vice President, Motion Picture Association: “It’s singling out protected speech.” (Erin Cox, “Taxing Digital Ads Could Bring Maryland $250 Million — And A Hefty Legal Challenge,” The Washington Post, 1/29/20)
Sean Brescia, Principal, Mission Media: Paying For The Kirwan Commission Recommendations On The Back Of Businesses “Is As Economically Dangerous As It Is Preposterous.” “The agenda behind the bill is part of the Democratic-led Senate’s scramble to raid funds from any source they can to try to justify the incomprehensible cost of implementing recommendations of the so-called Kirwan Commission for education investment. This agenda is ill-informed, ill-advised and patently irresponsible. Attempting to pay for the Kirwan plan on the backs of businesses so legislators can claim they didn’t raise taxes on individuals is as economically dangerous as it is preposterous.” (Sean Brescia, “Proposed Digital Advertising Tax Bad For Business,” The Baltimore Sun, 1/21/20)
Costs Would be Passed On To Clients, Advertising Agencies Would Pull Their Business Out of Maryland. “Marketing and advertising agencies would be forced to pass this burden onto clients. The inconceivable administrative cost, inability to meet timelines and significant reduction in reliable metrics and return on investment would never be tolerated by clients. Instead, they will pull their money out of Maryland.” (Sean Brescia, “Proposed Digital Advertising Tax Bad For Business,” The Baltimore Sun, 1/21/20)
Van Stevenson, Senior Vice President, Motion Picture Association: Expressed Concerns That Maryland’s Digital Advertising Tax Would Double Tax Companies, Highlighted Additional Tax Equity Issues. “Our broadcast and cable program services which for example would include ABC, CBS, NBC, CBS All Access, ESPN, BET, just to give you a few examples. We already pay to the State of Maryland on gross revenue on the advertising earned from those particular services and others. Therefore, this new digital tax would actually be double taxing the same revenue because all of our services that you receive on traditional broadcast or cable have all migrated to the internet either in applications that are already there or for example, through your cable services which you can access on the internet, all that advertising is digital. Moreover, this tax on gross revenue is also discriminatory against advertising services on the internet and we respectfully submitted… that it raises constitutional issues particularly because it is signaling out protected speech, mainly advertising. In addition, the tiered tax imposes the highest tax burden on large companies only on digital advertising, but it doesn’t impose a corresponding tax on revenue from tangible or brick and mortar advertising.” (“Senate Budget And Taxation Committee: SB 2 Public Hearing,” Maryland General Assembly, 1/29/20)
Sean Looney, Vice President, State Government Affairs, Comcast NBCUniversal: “We Are Concerned About The Bill,” The Bill Instills A “Double Tax.” “But, we are concerned about the bill, especially as introduced, I think something can be fixed and we look forward to seeing those amendments. I also want to point out that regardless of how we do it, on its surface, it’s going to be a double tax. Because companies like Comcast NBCUniversal already pay corporate income tax on the revenue we obtain from advertising revenue. So by putting now another gross receipts tax on this that’s a double tax.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20)
Rebecca Snyder, Executive Director, MDDC Press Association: A Digital Advertising Tax Is The “Antithesis Of Being ‘Open For Business’,” Slows Economic Growth. “Of special concern is the focus on taxing ads and advertising services. Advertising connects consumers to products and enables businesses to grow. Taxing advertising and advertising services will choke economic growth… This is the antithesis of being ‘Open for Business.’ Taxing advertising and advertising services doesn’t make good business or economic sense. It will hurt consumers and businesses and slow Maryland’s economic growth.” (Rebecca Snyder, “Taxing Advertising To Fund Maryland Education Reform Would Cripple Economic Growth,” Delmarva Now, 2/28/20)
Randolph May And Andrew Long, Free State Foundation: A Digital Advertising Tax Would “Encourage Companies To Redirect Advertising Expenditures To Other States,” In Turn Harming Maryland Businesses. “Digital advertising is a significant contributor to the economy, generating $130 billion in annual revenues. H.B. 732 imposes a second levy, in addition to the sales tax, on goods and services marketed via digital advertising, which would increase prices and drive down both demand and sales tax revenues. The legislation also would encourage companies to redirect advertising expenditures to other states. This would reduce total spending on digital advertising in Maryland, harming local businesses, in particular those that depend on advertising revenues.” (Randolph May and Andrew Long, “Maryland’s Digital Ad Tax Is A Bad Idea, And Gov. Hogan should Veto It,” The Baltimore Sun, 3/30/20)
Jeff Friedman, Partner, Evershed Sutherland: It Is “Upset[ting]” That Legislators Are Proposing Such Tax Increases During A Crisis. “The fact that the Maryland legislature is dumping these tax proposals on them at this time of crisis is really something to be upset about,’ Friedman said. Sudden changes to the tax code are likely not at the forefront of people’s minds as they cope with the pandemic, he said.” (Sam McQuillan, “Maryland’s Digital Sales Tax Clears Legislature,” Bloomberg Tax, 3/19/20)
A Coalition Of Advertising And Media Leaders Wrote A Letter Strongly Opposing The Digital Advertising Tax, Calling It “One Of The Most Serious Threats To Commercial Advertising In The United States In Several Decades.” “The proposed tax on digital advertising would represent one of the most serious threats to commercial advertising in the United States in several decades. If Maryland were to enact this tax on advertising, it would become the first state or locality in the United States to impose a targeted, punitive tax on the gross revenue derived from digital advertising services.” (Josh Eggerton, “Media Mass Against Maryland Digital Ad Tax,” Broadcasting & Cable, 2/28/20)
Chris Oswald, Senior Vice President, Association Of National Advertisers: The Digital Advertising Tax Threatens America’s Commercial Advertising Industry; Attempts By Other States To Implement A Similar Tax Have Failed. “ANA and it’s members understand and appreciate the importance of securing more funding for Maryland’s education programs. However, we believe that the proposed tax on digital advertising revenues in HB 695 represents ones of the most serious threats to commercial advertising in the United States that we’ve encountered in several decades. On behalf of the hundreds of thousands of businesses both in Maryland and across the country that advertise to Maryland residents, we urge an unfavorable report to this legislation. If enacted, Maryland would become the first state in the U.S. to impose a targeted punitive tax on the gross revenue derived from digital advertising services… Proposals similar to the tax on digital advertising proposed in this bill have failed in other states in the past. Arizona, Iowa, and Florida each passed broad advertising taxes years ago, each state later repealed these taxes because they hurt their local economies, and they proved impossible to administer. In total broad based advertising taxes have been considered in more than 40 states and rejected by all of them.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20) Oswald: “…We have other states not too far away, where I think you’ll see business flee and advertising flee.” (“House Budget And Taxation Committee: HB 695 Public Hearing,” Maryland General Assembly, 2/28/20)